By Jay Heflin - 06/14/10 02:45 PM EDT
In a letter on Monday, Senate Majority Leader Harry Reid (D-Nev.) and fellow Caucus members formally urged BP CEO Tony Hayward to set up a $20 billion escrow account for economic damages and clean-up costs associated with the oil spill in the Gulf of Mexico.
"Although legislative action is forthcoming, the damages are immediate," the letter states. "In order to ensure BP fully and quickly covers the costs of this disaster, we are calling on BP to immediately establish a special account of $20 billion, administered by an independent trustee, to be used for payment of economic damages and clean-up costs."
Over the weekend, President Barack Obama and Senate Democrats made a similar
Reid contends the establishment of the account will ensure no delay in reimbursing legitimate claims and money will be available for future claims, perhaps after the clean up effort has ended.
"The damages caused by your company are far reaching," the letter states. "While much is already visible today, history informs us that the full extent of the destruction may not be discovered for months or even years."
The letter notes that after the Exxon Valdez spilled oil into Alaska's Prince William Sound the oil company fought liability claims and ultimately paid far less in damages discovered years after the spill.
"[It] is already evident that fishermen, shrimpers, the tourist industry, and the secondary industries that support them will sustain billions of dollars in losses," states the letter about the BP spill. "It is also possible that marine and wildlife habitats will be destroyed, estuaries and wetlands will be decimated and bird, fish and animal populations will be devastated."
A study entitled Gaining Ground by Earth Economics suggests substantial oil damages to the Mississippi Delta could have a material impact on BP's bottom line.
Using a series of economic methodologies to calculate the total assets in the area, the study says the affected area is worth between $330 billion and $1.3 trillion. It is unlikely that BP spill will wipe out the entire area. But the company's capitalization hovers around $160 billion, which the study points out is less than half of the low-end calculation for the Delta's overall worth.
BP board members are reportedly in discussions Monday about whether they will pay to shareholders a dividend on Thursday.